Castlebrook [2009] QBCCMCmr 15 (19 January 2009)

Last Updated: 19 February 2009

REFERENCE: 0892-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	19372
Name of Scheme:	Castlebrook
Address of Scheme:	18 Denver Road CARSELDINE QLD 4034

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Carl and Geraldine Hatte, the owners of lot 55

I hereby order that the application for orders That Motion 2 of the EGM on 29 October 2008 be declared invalid; and That all owners be given the opportunity to obtain quotes for a new management agreement before another EGM is called. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0892-2008

“Castlebrook” CTS 19372

Application

This application is by Carl and Geraldine Hattee, the owners of lot 55 (applicants), against the body corporate, seeking final orders in the following terms:

1. That Motion 2 of the EGM of 29 October 2008 be declared invalid.
2. That all owners be given the opportunity to obtain quotes for a new management agreement before another EGM is called.
   

Motion 2 as recorded in the Secret Ballot Voting Paper included in the Notice of Meeting dated 1 October 2008 for an EGM scheduled for 29 October 2008 was as follows:

New Management (Caretaking) Agreement and Letting Authority
Proposed by Garry Noel Leaman – Lot 37
Resolution Required – Ordinary Resolution decided by Secret Ballot without the use of proxies

1. That subject to reasonable costs of the Body Corporate (including legal and administrative) being paid by Garry Noel Leaman, the Body corporate consents to the execution of and authorises that its common seal be affixed to:
   
   1. The Deed of Termination of Engagement of Manager and Engagement of Letting Agent Agreements between the Body Corporate and Garry Noel Leaman as attached to this Motion. The Deed of Termination of Engagement of Manager and Engagement of Letting Agent Agreements shall commence on 1 November 2008; and
   2. The Caretaking Agreement between the Body Corporate and Garry Noel Leaman as trustee for the Leaman Family Trust as attached to this Motion. The Caretaking Agreement shall commence on the 1 November 2008 and terminate on 1 November 2018; and
   100. The Letting Agreement between the Body Corporate and Garry Noel Leaman as trustee for the Leaman Family Trust as attached to this Motion. The Letting Agreement shall commence on the 1 November 2008 and terminate on 1 November 2018;
   4. The Section 116 Deed between the Body Corporate and Garry Noel Leaman as trustee for the Leaman Family Trust (Letting Agent) and Garry Noel Leaman and Rose Marle Leaman (Lot Owners) as attached to this Motion. The Section 116 Deed is to commence 1 November 2008.
      

On 27 October 2008 I issued the following interim order in respect of this matter:

I hereby order that the Extraordinary General Meeting scheduled to be held at 3pm on Wednesday 29 October 2008 on site at the BBQ area, 18 Denver Road, Carseldine must not proceed.

I further order that the Body Corporate for Castlebrook shall not make any decision regarding the engagement of a caretaking service contractor or letting agent until a final order is made in respect of this application, unless the decision is made in respect of a motion at a general meeting called after the date of this order and for which all lot owners have been specifically invited to submit motions.

I further order that the Body Corporate for Castlebrook shall provide a copy of this order and the accompanying statement of reasons to all lot owners within seven (7) days of the date of the order.

This interim order has effect until six (6) months have elapsed from the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn, rejected or otherwise ended (whichever is earlier).

Motion 2 as set out above, has not therefore been voted on.

Jurisdiction

“Castlebrook” is a community titles scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) comprising 55 residential lots and common property. The scheme is registered as a standard format plan of subdivision.

The current Standard Module commenced on 30th August 2008, replacing the previous Standard Module that operated from July 1997 (Previous Module). A number of provisions of the Standard Module are the same, or substantially the same as provisions in the Previous Module despite the provisions having different section numbers. These provisions are generally to be dealt with as replacements of the similar provisions of the repealed legislation and anything done under the Previous Module will not generally be affected by the commencement of the present Standard Module (sections 209 -216, section 20 Acts Interpretation Act.). Where relevant, references will be made to the Previous Module in parentheses after the current module reference.

This is a dispute between an owner and the body corporate that falls within the dispute resolutions provisions of the Act (see ss.226, 227 & 228).

Procedural matters

On 4 November 2008, a copy of the application was provided to the body corporate care of Body Corporate Systems (the Body Corporate Manager) for distribution to the owner/s of each lot (excluding the applicant) and the committee, with an invitation to respond to the matters raised in the application. Mr Leaman, as an affected party, was also specifically invited to respond to the matters raised in the application.

A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.

Submissions

In addition to the three submissions received in response to the application for interim orders, a further 23 submissions were received in response to the application for final orders. Of the 23 submissions made, 15 were supportive of the applicants and 8 were not supportive.

The submissions made in support of the applicants were to the following effect:

• All owners should be given a say about what is happening in the complex. It is not good enough for the committee to claim that by voting “yes” or “no” that owners are getting to have their say. Owners might want to add something to the discussion; that should be their right.
• Some owners might not even want a manager at all. From what some owners see, all the contractor does is cut and trim the grass and look after the swimming pool, all of which is just general maintenance.
• The new contract put forward allows the contractor to do less than ever – possibly the body corporate can get by with just having people come in to do what is needed when it has to be done.
• With 18 months left on the contract, some owners wonder what the hurry is – could he want to get out of here and sell to someone else?
• There has been a lack of due process and proper consultation in a very contentious complex and lack of safeguards for body corporate members within the proposed agreement.
  

Submissions made that did not support the outcomes sought by the applicants were to the following effect:

• The committee take seriously their responsibility toward other members of the body corporate. The committee members are mostly retired. The rules are not easy for lay people to navigate. The committee, body corporate manager and resident manager slipped up in relation to the calling of the EGM, but all are innocent of any deliberate wrongdoing, and all have learned a hard lesson.
• Owners are very happy with the way in which the present committee members have undertaken their duties.
• They are happy with the proposed management agreement, should it proceed in the future.
• If owners are not in favour of Motion 2, all they have to do is vote ”no”.
  

Mr Leaman made specific submission to the following effect:

• The first order sought by the applicants has effectively occurred. For the matter to be considered at a future general meeting, he will need to put forward a fresh motion.
• The EGM scheduled for 29 October 2008 failed to go ahead because there was a procedural problem with the calling of the meeting. The intention of the committee was to hold an EGM to consider the new agreements. Whether or not there was a technical problem with the way the meeting was called should not in theory affect the outcome of the meeting if it had gone ahead. The courts have in the past upheld decisions made at meetings that have had some sort of a technical deficiency. There was not any sort of impropriety or fraud involved here, just a mistake.
• The second order sought by the applicants “That all owners be given the opportunity to obtain quotes for a new management agreement before another EGM is called” could be a very complicated exercise and is one that is not supported by any provisions of the Act or Standard Module.
• The new agreements proposed met all the legal requirements for engagements and authorisations. There is no basis for the applicants to have all owners obtain quotes for a new agreement before an EGM is called. There is no basis for allowing owners a specific period of time to prepare quotes for service contract agreements.
• The committee did a survey of owners about 12 months ago to gauge their support for having a resident service contractor. The response was an overwhelming “yes” and indicates why the committee felt it was right to push forward with the new agreements.
• The applicants contend that because the agreements had 18 months to run, there was plenty of time to play with. This time can be very quickly eaten up with discussions, disputes and compromises. That time is needed to make sure that all parties were not disadvantaged. The body corporate could be left in a difficult situation if the agreements ended. There are also some things in the current agreements that need to be fixed – probably sooner rather than later.
  

Mr and Mrs Hatte exercised their right to inspect the submissions and replied to those submissions on 17 December 2008. In addition to their reply, three owners also purported to reply to the submissions. The applicants, in turn, then replied to those replies. The applicants are the only party with a legislative right to reply. I have considered the content of their reply only in so far as I considered it relevant to the substance of this dispute.

Determination

That Motion 2 of the EGM on 29 October 2008 be declared invalid.

As my interim order prohibited the EGM scheduled for 29 October 2008 from proceeding, Motion 2 was not voted on. Accordingly, there is no resulting resolution that is capable of being declared invalid.

Further, I do not regard the motion itself as conflicting with the Act, Standard Module, or by-laws. Nor do I consider it to be otherwise unlawful or unenforceable such that a chairperson would be required to rule it out of order in accordance with section 81 (section 47) of the Standard Module were it to be considered at a subsequent general meeting. There has been no suggestion that the material required to be forwarded to members of the body corporate for the EGM scheduled for 29 October 2008 was otherwise than in accordance with the requirements of section 114(2)(c) (section 87(2)(c)) of the Standard Module. Indeed the only objection raised by the applicants in relation to Motion 2 itself (as distinct from the calling of the EGM), appears to be that owners had not been given a prior opportunity to submit their own alternatives, or contribute to discussion on the topic. I will discuss this aspect further below. Suffice to say that there is nothing inherently wrong with Motion 2, as it was proposed for the EGM scheduled for 29 October 2008.

For these reasons, I decline to order in the terms sought by the applicants in relation to Motion 2.

That all owners be given the opportunity to obtain quotes for a new management agreement before another EGM is called.

For the following reasons, I do not consider it just and equitable to make an order in these terms.

The crux of this application, (apart from the defect in the calling of the EGM which has already been dealt with by me ordering that it not proceed), appears to be that owners had not been given a prior opportunity to submit their own alternatives to Motion 2, or contribute to discussion on the topic. In this respect, the applicants’ grounds are somewhat misconceived.

All owners do have the opportunity to obtain their own quotes for a new management agreement and to present any proposed agreements to owners in general meeting. Section 69 (section 41) of the Standard Module provides that owners may, at any time, submit a motion for consideration at a general meeting of the body corporate. The committee has the same right. If a motion is submitted, subject to certain exceptions[1], it must be included on the agenda for the next general meeting on which it is practicable to do so.

I do not see any reason to prevent the calling of any further general meetings (extraordinary or annual) for any particular period of time in order to allow more time within which owners can source alternative agreements if they wish. The minutes of a committee meeting held on 25 June 2008 reveal that Mr Leaman had tabled a letter covering submission of a new contract. The minutes stated that the committee would be investigating the processing of this submission in liaison with the body corporate manager and independent lawyers. From this date at least, owners should have been aware that the committee was considering this issue and from that time on, could have put any concerns in writing to the committee and/or begun sourcing their own alternatives to be considered by the body corporate.

Further, the democratic process provided by the legislation for voting at general meetings, in my view, offers owners sufficient protection if they are opposed to the action considered by the committee to be in the best interests of the body corporate. If the body corporate does consider a motion submitted by Mr Leaman in similar terms to Motion 2 proposed to have been considered at the EGM scheduled for 29 October 2008 and owners are opposed to the agreements he proposes, owners can simply vote “no” to his motion. Owners in favour of the proposed agreements can vote “yes”. If the motion is not passed, owners will be left with the existing agreements still in place until they expire or until another motion with the same effect is passed in the meantime (noting that such a motion can only be considered once each financial year, in accordance with section 69(4)(c) (section 41(4)(c)) of the Standard Module). If a motion in similar terms to Motion 2 proposed to have been considered at the EGM scheduled for 29 October 2008 is subsequently passed, the existing contracts will be terminated and new ones will become effective. I am satisfied that owners, having had the opportunity of reading my decision of 27 October 2008 and the reasons for it, and the opportunity to make submission in response to the final orders sought in this application, are capable of making their own, well-informed decision.

The applicants sought to prevent the body corporate from voting on Motion 2 of the EGM proposed for Wednesday 29 October, on the basis that the calling of the meeting was not properly authorised and that owners want other alternatives considered, or at least to have some input into the terms of any contract considered by the body corporate. While I was prepared to make an interim order preventing the body corporate from considering the issue, primarily on the basis that the EGM was not properly authorised, I am not prepared to make the final orders sought. It is now clear that even though the committee did not pass a committee resolution authorising the calling of the EGM, it was in favour of the meeting being held to consider the proposed Motion 2. There is no reason why the committee cannot now properly authorise a general meeting to proceed to consider motions in relation to the engagement of a service contractor. Further, since the Notice of the EGM scheduled for 29 October 2008 was distributed to owners on 1 October 2008, owners have had a period of some three and half months to consider this matter (or arguably, some six and a half months - since June 2008 when the committee recorded that it was considering the issue in minutes of a committee meeting held on 25 June 2008), including by obtaining quotes for alternative service contractors if they wished. In these circumstances, owners are entitled to consider any motions in relation to the engagement of a service contractor in the context of a properly convened general meeting and to determine those motions by voting thereon. This is the appropriate forum in which such decisions should be made.

I acknowledge the stated desire of some owners to have some input into the terms of any contract considered by the body corporate. Practically, in a scheme consisting of 55 lots, this poses numerous challenges. Perhaps owners could have put their specific requests in writing to the committee. At the end of the day, if owners disagree with the contracts proposed by the committee, they can vote “no” when the contracts are considered in general meeting. Owners also have the option of obtaining their own quotes for alternative contracts, as mentioned above.

For the reasons above, I have dismissed the application for the final orders sought.

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[1] A motion submitted by an owner may be included on the agenda for an AGM only if the secretary receives the motion before the end of the body corporate’s financial year immediately preceding the meeting.
A motion of the following type must not be included on the agenda for a general meeting if the motion’s inclusion would result in the body corporate considering a motion of that type more than once in a financial year for the body corporate:
(a) a motion proposing a change in the applicable regulation module for the scheme;
(b) a motion proposing that the remuneration paid to a particular service contractor be changed; and

(c) a motion proposing the engagement of a service contractor or authorisation of a letting agent be amended, if, as a result of the amendment, the engagement or authorisation would include a right or option of extension or renewal.